Like direct award recipients, are sub-recipients under ARPA (SLFRF) required to obligate their funds, by contract or other means, by the end of 2024?

No. While direct recipients of a State and Local Fiscal Recovery Fund (“SLFRF”) award are required to obligate funds by the end of 2024, subrecipients of SLFRF funds are not subject to the same requirement.

In November 2023, The U.S. Department of Treasury (“Treasury”) issued an Obligation Interim Final Rule that provides definitions and guidance related to SLFRF obligations. The following excerpt from the Obligation Interim Final Rule relays that subrecipients are not subject to the December 31, 2024, obligation deadline:

Treasury is clarifying that subrecipients are not subject to this deadline. As stated in the SLFRF rule and as referenced above, Treasury defined obligation to include entry into a subaward. A cost is considered to have been incurred once a recipient enters into a subaward that obligates the recipient to cover that cost. Once a recipient has obligated funds, the requirement in the statute and Treasury’s rule to obligate funds by December 31, 2024, has been satisfied, such that subrecipients need not themselves also obligate funds received under a subaward by December 31, 2024. (Contractors also do not need to obligate funds received under a contract by December 31, 2024.) It remains the case that all SLFRF award funds must be expended by the recipient and any subrecipients by 2026, given the termination of the period of performance on December 31, 2026.[1]

While the obligation deadline does not apply to subrecipients, it is important to note that the expenditure deadline of December 31, 2026, applies to both direct recipients and subrecipients. Direct recipients of SLFRF awards must ensure that their subrecipients are on-track to expend all funding by the expenditure deadline.